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Financial Education for Everyone

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September 13, 2013

Millions of young Americans recently began their senior year of high school. If your kid is among them, he or she is probably busy juggling homework, extracurricular activities and maybe a part-time job – all while trying to savor the last official year of childhood and simultaneously prepare for impending adulthood.

You, on the other hand, are likely just wondering how the heck you're going to pay for college.

College may be a year away, but scholarship and loan application deadlines are just around the corner. As you'll soon learn, there are tons of decisions to make and documents to fill out. Plus, some states award aid on a first-come, first-served basis, meaning funds for your child's dream school could be exhausted by the time you get your paperwork together.

If that doesn't make you want to get the jump on financial aid, I don't know what will.

Your first step is to complete the Free Application for Federal Student Aid (FAFSA) form, which is required by virtually all colleges, universities and career schools for federal student aid, as well as for most aid from states and individual colleges.

It's easiest to file an FAFSA online at www.fafsa.ed.gov You can also get a hard copy from your child's school or by calling 1-800-4-FED-AID. The FAFSA filing deadline for federal loans isn't until June 30, 2014, but many state and individual school deadlines fall months earlier.

Many types of student aid are available to help cover costs at four-year colleges and universities, community colleges, and trade, career or technical schools, including:

  • Hundreds of thousands of free scholarships and fellowships are awarded each year. Visit www.finaid.org/scholarships for helpful tips.
  • Federal Pell Grants are needs-based grants given to low-income students to pursue post-secondary education. The maximum annual Pell Grant amount is $5,500; but students can receive Pell Grants for no more than 12 semesters. They need not be repaid.
  • Federal Supplemental Education Opportunity Grants for up to $4,000 a year are awarded to undergraduates demonstrating exceptional financial need.
  • Federal Work-Study provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses.
  • Low-interest Federal Perkins Loans are for students who demonstrate exceptional financial need. They are "subsidized," meaning the government pays yearly interest while students are enrolled. They have no origination or default fees.
  • Direct Stafford Loans are low-interest federal government loans with no origination fee and come in two varieties: needs-based "Subsidized" loans for undergraduate students where the government pays the yearly interest while students are enrolled; and "Unsubsidized," for undergraduate and graduate students of any income level, where students are responsible for interest that accrues while enrolled.
  • Private Education Loans are offered by lenders to students and parents to supplement government loans. They aren't government-guaranteed or subsidized and typically carry higher interest rates, although you can borrow greater amounts. Details and rates vary widely.
  • Some colleges sponsor their own loans to students and parents. Interest rates may be lower than federal loans. Check each college's aid materials to see if they're available.
  • PLUS loans are federal loans that graduate or professional-degree students and parents of dependent undergraduate students can use to pay for education expenses. They are made through participating schools at a fixed interest rate. There is an origination fee.

Visit the Federal Student Aid site (http://studentaid.ed.gov ) and www.FinAid.org for complete explanations of the different types of grants/loans, calculators and many other tools.


This article is intended to provide general information and should not be considered health, legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.